Thallion Pharmaceuticals Inc.
TSX : TLN

Thallion Pharmaceuticals Inc.

June 03, 2009 07:00 ET

Thallion Raises $8.85 Million in Non-dilutive Financing

MONTREAL, QUEBEC--(Marketwire - June 3, 2009) - Thallion Pharmaceuticals Inc. ("Thallion") (TSX:TLN) today announced that it has entered into an agreement with Premium Brands Income Fund ("Premium Brands") (TSX:PBI.UN), a leading British Columbia-based income trust, to reorganize Thallion and add significant additional liquidity in the form of $8.85 million in new, non-dilutive capital to Thallion.

"This transaction allows us to sustain our clinical momentum in an extremely challenging market for growth capital," said Lloyd M. Segal, Chief Executive Officer of Thallion Pharmaceuticals Inc. "Concurrent with the transaction we continue to pursue available options that allow us to reduce our operational costs moving forward while maintaining clinical progress. In order to extend our development runway into 2011 with resources available post this transaction, we have reduced our headcount significantly and have also negotiated key long-term cost savings from our suppliers, landlords and on certain long-term commitments."

The non-dilutive transaction involves a corporate reorganization to be completed under a court supervised Plan of Arrangement. Thallion will transfer its assets and liabilities, including the proceeds from this transaction, to a newly incorporated subsidiary company, 4504011 Canada Inc. ("New Thallion OpCo"). On completion of the transaction, Thallion shareholders will have exchanged their Thallion shares on a one-for-one basis for shares of a parent company of New Thallion OpCo which shall subsequently amalgamate with New Thallion OpCo ("New Thallion").

New Thallion will carry on Thallion's business operations as a public entity and will retain all rights to related intellectual property as before the transaction.

As part of the Plan of Arrangement, Premium Brands unitholders, on completion of the transaction, will own 100% of the shares of the original Thallion entity.

Completion of the transaction is subject to receipt of court and other regulatory approvals and consents. It must also be approved by at least 66 2/3 percent of votes cast by both Thallion shareholders and Premium Brands unitholders. Based on a number of factors, including the recommendation of an independent committee of Thallion's Board of Directors, as well as a fairness opinion rendered by Thallion's financial advisor for the transaction, Thallion's Board of Directors unanimously recommends that Thallion shareholders approve the transaction.

Additional details regarding the transaction will be provided to Thallion shareholders in an information circular to be mailed in mid-June. The information circular will also be available at www.thallion.com and www.sedar.com. A special meeting of shareholders will be held in July 2009 at the offices of McCarthy Tetrault LLP, Suite 2500, 1000, De La Gauchetiere Street West, Montreal, Quebec. The transaction is expected to close in July 2009 subject to the satisfaction of customary closing conditions.

About Thallion Pharmaceuticals Inc.

Thallion Pharmaceuticals Inc. (TSX:TLN) is a biotechnology company developing pharmaceutical products in the areas of oncology and infectious disease. Thallion has three clinical programs at the Phase II stage of development. The two oncology product candidates include TLN-4601, a novel anti-cancer therapy targeting the RAS-MAPK pathway, and TLN-232, a peptide therapy targeting the M2 isoform of the metabolic enzyme pyruvate kinase (M2PK), with potential efficacy in multiple oncology indications. TLN-4601 and TLN-232 are currently recruiting patients in their respective multi-centre, Phase II, North American clinical trials. The Company's third product candidate, Shigamabs®, is a dual antibody product for the treatment of Shigatoxin producing E. coli bacterial infections. Additional information about the Company can be obtained at www.thallion.com.

Forward-Looking Statements

This press release contains certain forward-looking statements, including, without limitation, statements containing the words "believe", "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect" and other similar expressions which constitute "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, the obtaining of court and other regulatory approvals and consents, the satisfaction of closing conditions, adjustment provisions relating to the proceeds of the transaction, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time-to-time in the Company's ongoing filings with the Canadian securities regulatory authorities which filings can be found at www.sedar.com. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws.

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